A pair of reports from Canada serve as reminders of how housing bubbles are built. "Pinder Bains is a 30-year-old cashier taking courses towards becoming an accountant, but she has other ideas for making a living. That's why, on Vancouver's sunniest Saturday of the year, she is cooped up with almost 500 others in a conference room, listening to speakers on the general topic of earning 'passive income.'"

"'I'd like to, you know, not work.' she says."

"Wouldn't we all. And that's the lure of Ozzie Jurock's popular spring conference, LandRush 2006. 'You can create any life you want if you invest in real estate!' Mr. Jurock promises. 'I believe that.'"

"A host of vendors outside the conference room are also offering their market know-how, with tantalizing promises like How to Buy an Apartment Building with No Money Down! Realtor Randy Friesen, whose truck bears the logo 'If you've got money in the bank, you're not buying enough real estate,' hands out a phone book-sized package of properties he considers potential cash-flow generators."

"It doesn't take long for Ms. Bains to realize that the promise of income without work is beyond her means. Calculating a $400,000 mortgage with 25 per cent down, she would need a tenant to pay at least $2,000 a month to cover the payments and property taxes. That still leaves maintenance costs. 'I think you really need to do your investigating,' she says. To that end, she's thinking of taking Mr. Jurock's upcoming $1,497 weekend seminar course."

"Rudy Nielsen, another Landrush speaker owns and develops land across the province. Most of the properties he is selling now are parcels he bought two decades ago. Mr. Nielsen also shares the story of his own spectacular bankruptcy in 1982."

"'I was cocky and brash,' he says, recounting how he bought more than he could handle and found himself $1.5-million in debt. After his wife and banker left him, he took his dog and a canoe to a lake as far north as he could go and lived in the woods for two weeks."

"All day he fields calls from people asking if they should buy. 'I can't believe some of the people who have phoned me up and said, 'I've got a mortgage on my house, I've got a second, and I'm making payments with my credit card.' he fumes. 'I just feel sorry for those people. For Chrissakes, keep a safe fort!'"

The Toronto Star. "More than 17,000 new condos sold in Greater Toronto last year, the most ever in the history of the area. The good news for realtors is that Toronto is the hottest market in North America. The potentially bad news (if you're an investor) is that Toronto is the hottest market in North America."

"'We know that everything that goes up must come down. When anything seems too unbelievable, it usually is,' says economist Frank Clayton. 'And the longer the sales go on and prices appreciate, the bigger the adjustment we're going to have.'"

"There are already signs that developers may be hedging their bets. Several new projects in Toronto have been offering bonus commissions to agents. By the end of this year, housing economist Will Dunning estimates, 14,700 units will be completed and ready for occupancy. He expects more than 14,000 units to be completed in 2007."

"'We won't start seeing a lot of the effects until early 2007, but there will be a wave coming,' he said. Dunning has repeatedly warned that he thinks there is a 'high risk' that the market is overbuilt."

"One thing he and Clayton agree on is that there are a significant number of investors in the market, anywhere from 25 to 40 per cent. If the market softens, many will be placing their units back on the market. 'Things are totally out of whack; the numbers of condos being sold don't support demographics,' Clayton says."

"Even if the conservative estimate of 25 per cent is applied, that means there will be at least 3,000-plus condo rentals coming on the market every year for the next several years. Those condos are expected to compete with apartments and other condos to drive rental prices down and vacancy rates up. When investors can't rent their units, they tend to unload them."

"Some investors believe the Toronto market has legs because it isn't Miami or New York, or even Vancouver, where prices have gone up considerably more, argues Israel Schwartz, who is considered one of the shrewdest wheelers and dealers in the market. 'There is no such thing as a first-time house buyer in the Toronto market any more,' he says. 'It's about being a first-time condo buyer, because most people don't have a choice if they want to live downtown. That's what's fuelling this.'"

"Toronto developers have managed to boost their bottom line by building smaller units, says Schwartz, who sees shrunken condos as an inevitability. 'Ten years ago, you paid $250,000 for a 900-square-foot place, and now you're getting 600 square feet for the same price,' he says. 'But at least you're getting your foot in the door.'"